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Quality Control Review of the Ernst & Young LLP and the Defense Contract Audit Agency FY 2014Single Audit of SRC, Inc.




As the cognizant Federal agency for SRC, Inc., we performed a quality control review of the Ernst & Young LLP (E&Y) and the Defense Contract Audit Agency (DCAA) single audit report and supporting audit documentation for the audit period of October 1, 2013, through September 30, 2014. Our objective was to determine whether the single audit was conducted in accordance with generally accepted government auditing standards, generally accepted auditing standards, and the requirements of the Office of Management and Budget (OMB) Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”


SRC, Inc.

SRC, Inc. is a not-for-profit organization that provides services mainly to the Federal Government in a wide array of technology areas, including development and production of sensor systems, signal processing, information science and engineering, cyber security, environmental chemistry and risk assessment, and chemical biological defense. During F Y 2014, SRC expended $99 million in Federal funds on one program, the research and development cluster.  O f t he $99 million, SRC expended $89.6 million on Department of Defense programs. E &Y and DCAA performed a coordinated audit of SRC’s FY 2014 single audit.

Ernst & Young LLP

E&Y provides a wide array of business services, including audit and assurance, business and Government consulting, and tax preparation and planning. E&Y maintains its own system of internal quality control over its accounting and auditing practices, as required by the American Institute of Certified Public Accountants. E&Y’s office in Syracuse, New York, performed the SRC FY 2014 single audit in coordination with DCAA.

Defense Contract Audit Agency

DCAA operates under the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD.   DCAA maintains five regional offices, a field detachment division (for audits involving DoD classified programs), and a headquarters office in order to provide audit and financial advisory services to the DoD and other Federal agencies responsible for acquisition and contract administration. DCAA’s Upstate New York Branch Office and a field detachment office performed the SRC FY 2014 single audit in coordination with E&Y.

Single Audit:

Public Law 98-502, “The Single Audit Act of 1984,” (the Act) as amended, was enacted to promote sound financial management of Federal awards administered by non‑Federal entities and to establish a uniform set of auditing and reporting requirements for all Federal award recipients that are required to obtain a single audit. OMB Circular A-133 establishes policies that guide the implementation of the Act and provides an administrative foundation for uniform audit requirements of non-Federal entities administering Federal awards. Entities that expend Federal funds of $500,000 or more in a year are subject to the Act and OMB Circular A-133 requirements. Therefore, these entities must have an annual single or program‑specific audit performed in accordance with generally accepted government auditing standards and submit a complete reporting package to the Federal Audit Clearinghouse.3 The single audit includes an audit of the non-Federal entity’s financial statements and Federal awards as described in OMB Circular A-133.

Review Results:

SRC complied with OMB Circular A-133 requirements in preparing the schedule of expenditures of Federal awards, the summary schedule of prior audit findings, and the corrective action plan for the FY 2014 single audit. E&Y and DCAA complied with the auditing standards and OMB Circular A-133 requirements in performing the SRC FY 2014 single audit.